Commercial Law Case. Jack needs to be advised regarding the two issues he has with the Solent Builders and Ron. The first issue is that, Jack discovered that Solent Builders in liquidation and have not paid for the bags of cement. The second issue is that

Unlike s. 24 this provision states that the effect of a disposition by Jack to Solent Builders is as if they were a mercantile agent in possession with the owner's consent. In Newtons of Wembley v. Williams it was held that this means that although the Solent Builders need not in fact be a mercantile agent his disposition to Jack must be as if it were in the ordinary course of business of a mercantile agent. This imposes a severe restriction on the operation of s.25 because most private sales and many business sales will not be in circumstances similar to a sale by a mercantile agent.

Furthermore, National Employers Mutual General Insurance Association v. Jones held that s. 25 must be read so as to apply only where the owner has actually consented to the goods being in the possession of Jack. Thus where the goods delivered to the Solent builders but have not paid for the bags of cement and the bricks cannot rely on s. 24.

The common law rule nemo dat quod non habet means that a seller of goods cannot transfer ownership to a buyer if the seller has no right to sell the goods. As Ron is not the owner of the Trucks set and has not authorised Jack Utility Finance is the owner of the truck. Ron was incapable of transferring ownership to Utility Finance Ltd at common law. This rule means that all purchasers of goods are at risk because it can rarely be discovered if the seller is the true owner. To provide security for innocent buyers several exceptions to the nemo dat rule have been enacted by statute. If any of these exceptions applies then the buyer is protected and the true owner loses ownership of the contested goods.

The first exception to consider here is estoppel as outlined in s 21(1) of the Sale of Goods Act 1979 which provides that “Subject to this Act, where goods are sold by a person who is not their owner, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.”

It could be argued that Jack is precluded from asserting his ownership of the Trucks set because he could be said to make it appear to everyone else that Ron was the owner. Most people tend to assume that whoever has possession of goods is their owner unless there is an obvious reason for believing otherwise. However, the courts have consistently held that merely letting someone else have possession of your goods is not a representation to the world at large that the possessor is the owner. In Central Newbury Car Auctions v Unity Finance it was held that letting someone have possession of your car and registration document did not make it appear that the possessor was the owner. A car registration document is not a document of title. Therefore Utility Finance Ltd will not be able to convince a court that Jack’s conduct in ordering the delivery truck from Ron estopps him from claiming ownership.

The other exception that is relevant here is s 2(1) of the Factors Act 1889 which provides that “Where a mercantile agent is, with the consent of the owner, in possession of goods or of the documents of title to goods, any sale, pledge, or other disposition of the goods, made by him when acting in the ordinary course of business of a mercantile agent, shall, subject to the provisions of this Act, be as valid as if he were expressly authorised by the owner of the goods to make the same; provided that the person taking under the disposition acts in good faith, and has not at the time of the disposition notice that the person making the disposition has not authority to make the same.”

According to section 1(1) of the 1889 Act a mercantile agent is someone has “in the customary course of his business as such agent authority either to sell goods, or to consign goods for the purpose of sale, or to buy goods, or to raise money on the security of goods.” It is unlikely that Ron sells and buys goods on behalf of Utility Finance Ltd so he is probably not a mercantile agent. According to Pearson v Rose & Young the ‘agent’ must accept the goods in their capacity as an agent. In that case a car was left with a garage for repair and the garage owner fraudulently sold it. It was held that the garage proprietor was not acting as a mercantile agent within the terms of the 1889 Act; he was a repairer. Therefore Ron will not be held to be acting as a mercantile agent when he only paid 10% of the price of the hire charge to the owner Utility Finance Ltd. It follows that Ron cannot take advantage of s 2 of the 1889 Act. It therefore seems that Ron has not acquired ownership of the delivery truck and that Jack can rely on Utility Finance Ltd ownership and sue Ron in conversion for the return of the £10,000 or its value.  

In conclusion, it envisages Jack contracting to sell goods to Solent Builders under retention of title clause but permitting Ron to deliver the delivery truck. The contract between Jack and Solent Builders must be a sale or an agreement to sell and no other type of transaction. However, under section 27 of SGA 1979, it is the duty of the seller to deliver the goods, and of the buyer to accept and pay for them, in accordance with the terms of the contract of sale. Therefore, it seems that, Jack can sue both of the parties under the Sale of Goods Act 1979 s.21, s.25 and s.27 as explained above. In any action for breach of contract to deliver specific or ascertained goods the court may, if it thinks fit, on the plaintiff's application, by its judgement or decree direct that the contract shall be performed specifically, without giving the defendant the option of retaining the goods on payment of damages.

Bibliography

Roger J Smith, Property Law, Cases and Materials, Second Edition, 2003.

Elizabeth Cooke, The Modern Law of Estoppel, Oxford, 2000

 

 

 

Also, i have used lecture and seminar notes throughout the assignment.

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